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Why Is Unum Group (UNM) Up 6% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Unum Group (UNM - Free Report) . Shares have added nearly 6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to their next earnings release, or is the stock due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Unum Group Q4 Earnings Beat Estimates, Grow Y/Y
Unum Group’s fourth-quarter 2016 operating net income of $1.00 per share beat the Zacks Consensus Estimate of $0.98 by 2%. The bottom line also improved 5.3% year over year.
Strong performance at Unum U.S. and Colonial Life was partially offset by weakness at Unum U.K.
In 2016, the company displayed growth, disciplined execution, and efficient return of capital to shareholders. Unum Group’s performance was supported by market-leading positions in employee benefits, resulting in strong profits and robust premium growth in its core business operations. We expect this trend to continue.
Including after-tax realized investment gains and losses on investment portfolio as well as amortization of prior period actuarial losses on pension plans, net income grew 15.1% year over year to $1.07 per share.
Total operating revenue of Unum Group was $2.8 billion, up 1.6% year over year. Revenues were in line with the Zacks Consensus Estimate. Premium income improved slightly, whereas net investment income declined year over year.
Total benefits and expenses inched up 0.8% year over year to $2.4 billion. Rise in commissions, interest and debt expenses, deferral of acquisition costs, amortization of deferred acquisition costs and other expenses led to the overall increase in costs.
Full-Year Highlights
In 2016, Unum Group’s operating net income of $3.92 per share improved 7.7% year over year. Net income came in at $3.95 per share, up 12.9% year over year.
Revenues came in at $11 million, up 2.3% from 2015.
Quarterly Segment Update
Unum U.S.: Premium income was $1.3 billion, up 5.9% year over year. Operating income grew 12.1% year over year to $240.1 million.
Unum U.K.: Premium income decreased 18.9% year over year to $121.9 million. In local currency, income dipped 0.9% year over year to £98.2 million, mainly due to the lack of growth in the in-force business.
Operating income was $29.2 million, down 19.2% year over year. In local currency, the figure declined 1.2% year over year to £24.1 million.
Benefit ratio was 67.6%, down 230 basis points (bps), owing to a lower average size of new claims in the group life business. A higher benefit ratio reflects improved average claim size and an increase in the claim incidence rate in group life as well as a higher average claim size in group long-term disability.
Colonial Life: Premium income increased 6.8% year over year to $360.4 million on sales growth and favorable persistency. Operating income grew 3% to $79.9 million.
Benefit ratio expanded 20 bps year over year to 51.4%.
Closed Block: Premium income fell 2.2% from the year-ago quarter. The decline stemmed from expected policy terminations and maturities for the individual disability line of business. Nonetheless, improvement in premium income for the long-term care line of business, owing to premium rate increases on certain in-force policies, limited the downside.
Operating income came in at $34.6 million, up 23.1% year over year.
Corporate: The segment incurred an operating loss of $37.6 million, wider than an operating loss of $34.6 million in the year-ago quarter. Lower investment income and higher operating expenses resulted in the wider loss.
Capital Management
As of Dec 31, 2016, the weighted average risk-based capital ratio for Unum’s traditional U.S. insurance companies was in excess of 400%. Unum exited the quarter with cash and marketable securities worth $594 million.
Book value per share of Unum increased 8.5% year over year to $39.02 as of Dec 31, 2016.
The company spent $103 million to buy back about 2.5 million shares in the quarter.
Guidance
Unum Group projects 2017 operating earnings per share growth between 3% and 6%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one upward revision for the current quarter.
At this time, Unum Group's stock has a poor Growth Score of 'F', however its Momentum is doing a lot better with a 'B'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Outlook
While estimates have been trending upward for the stock, the magnitude of these revisions is a net zero. The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Unum Group (UNM) Up 6% Since the Last Earnings Report?
It has been about a month since the last earnings report for Unum Group (UNM - Free Report) . Shares have added nearly 6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to their next earnings release, or is the stock due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Unum Group Q4 Earnings Beat Estimates, Grow Y/Y
Unum Group’s fourth-quarter 2016 operating net income of $1.00 per share beat the Zacks Consensus Estimate of $0.98 by 2%. The bottom line also improved 5.3% year over year.
Strong performance at Unum U.S. and Colonial Life was partially offset by weakness at Unum U.K.
In 2016, the company displayed growth, disciplined execution, and efficient return of capital to shareholders. Unum Group’s performance was supported by market-leading positions in employee benefits, resulting in strong profits and robust premium growth in its core business operations. We expect this trend to continue.
Including after-tax realized investment gains and losses on investment portfolio as well as amortization of prior period actuarial losses on pension plans, net income grew 15.1% year over year to $1.07 per share.
Total operating revenue of Unum Group was $2.8 billion, up 1.6% year over year. Revenues were in line with the Zacks Consensus Estimate. Premium income improved slightly, whereas net investment income declined year over year.
Total benefits and expenses inched up 0.8% year over year to $2.4 billion. Rise in commissions, interest and debt expenses, deferral of acquisition costs, amortization of deferred acquisition costs and other expenses led to the overall increase in costs.
Full-Year Highlights
In 2016, Unum Group’s operating net income of $3.92 per share improved 7.7% year over year. Net income came in at $3.95 per share, up 12.9% year over year.
Revenues came in at $11 million, up 2.3% from 2015.
Quarterly Segment Update
Unum U.S.: Premium income was $1.3 billion, up 5.9% year over year. Operating income grew 12.1% year over year to $240.1 million.
Unum U.K.: Premium income decreased 18.9% year over year to $121.9 million. In local currency, income dipped 0.9% year over year to £98.2 million, mainly due to the lack of growth in the in-force business.
Operating income was $29.2 million, down 19.2% year over year. In local currency, the figure declined 1.2% year over year to £24.1 million.
Benefit ratio was 67.6%, down 230 basis points (bps), owing to a lower average size of new claims in the group life business. A higher benefit ratio reflects improved average claim size and an increase in the claim incidence rate in group life as well as a higher average claim size in group long-term disability.
Colonial Life: Premium income increased 6.8% year over year to $360.4 million on sales growth and favorable persistency. Operating income grew 3% to $79.9 million.
Benefit ratio expanded 20 bps year over year to 51.4%.
Closed Block: Premium income fell 2.2% from the year-ago quarter. The decline stemmed from expected policy terminations and maturities for the individual disability line of business. Nonetheless, improvement in premium income for the long-term care line of business, owing to premium rate increases on certain in-force policies, limited the downside.
Operating income came in at $34.6 million, up 23.1% year over year.
Corporate: The segment incurred an operating loss of $37.6 million, wider than an operating loss of $34.6 million in the year-ago quarter. Lower investment income and higher operating expenses resulted in the wider loss.
Capital Management
As of Dec 31, 2016, the weighted average risk-based capital ratio for Unum’s traditional U.S. insurance companies was in excess of 400%. Unum exited the quarter with cash and marketable securities worth $594 million.
Book value per share of Unum increased 8.5% year over year to $39.02 as of Dec 31, 2016.
The company spent $103 million to buy back about 2.5 million shares in the quarter.
Guidance
Unum Group projects 2017 operating earnings per share growth between 3% and 6%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one upward revision for the current quarter.
Unum Group Price and Consensus
Unum Group Price and Consensus | Unum Group Quote
VGM Scores
At this time, Unum Group's stock has a poor Growth Score of 'F', however its Momentum is doing a lot better with a 'B'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Outlook
While estimates have been trending upward for the stock, the magnitude of these revisions is a net zero. The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.